Terror Financing Current Affairs - 2019

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Sri Lanka removed from FATF’s Grey List

Sri Lanka has been removed from ‘Grey List’ of Financial Action Task Force (FATF) following the new measures taken by the country on financial security. The word ‘Grey List’ identified by FATF refers to a jurisdiction with strategic Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) deficiencies.

Key Highlights

The announcement regarding removal of Sri Lanka’s name from the list of countries at risk for money laundering was made by Sri Lankan Minister of Finance Mangala Samaraweera, after a 5-day FATF plenary concluded in Paris, France.

FATF, the international terror financing watchdog, noted that Sri Lanka set out a sound framework to bring the commitment of all stakeholders for enhancing AML/CFT standards in order to improve compliance and country rating.

Background

Sri Lanka was first included in FATF’s blacklist in 2011, and by 2012, Sri Lanka was listed in the list as a dangerous country with no commitment to financial security plan.

Later in October 2016, FATF subjected Sri Lanka to a review of FATF’s International Cooperation Review Group (ICRG) for assessing the progress of AML/CFT effectiveness in country.

However, since 2016, Sri Lankan government together with country’s Central Bank and other financial institutions has taken several measures to ensure the financial security of country. As a result these efforts, Sri Lanka was declared a cooperating state in 2016 and FATF putted Sri Lanka on its grey list from November 2017. The island nation has reported the progress achieved in the implementation of action plan regularly to FATF.

What is Financial Action Task Force (FATF)?

It is a Paris (France) based inter-governmental organisation established in 1989.

It is the international terror financing watchdog that combats terrorist financing, money laundering as well as other related threats to integrity of international financial system.

FATF report on money laundering: slams Pakistan for terror funding

The Asia – Pacific Group of FATF (Financial Action Task Force) slammed Pakistan as the later failed to take actions against terror groups. On 5th October, 2019, the group published report on Money Laundering and terror financing in Pakistan.

Key statements of the report

  • The watchdog reported that Pakistan failed to implement the UNSC (United Nations Security Council) resolution against Hafiz Saeed, JeM – Jaish – e – Mohammed, LeT – Lashkar – e – Taiba.
  • The report disagreed Pakistan’s self – assessment that it only faces ‘medium’ category risks.
  • It also said that the key banking institutions in the country like the Securities and Exchange Commission of Pakistan and State Bank of Pakistan had very limited or no understanding of the terror financing regimes of the country.
  • The report alerted Pakistan that it could be black listed alongside North Korea and Iran unless it takes actions against the UN – designated terrorists in its soil

FATF

FATF is the Finacial Action Task Force. It is an inter – governmental body that was established in 1989. The main objective of the organization is to set standard and promote implementation of legal regulatory measures for money laundering and terror financing. It issued a series of recommendations as international standard to combat money laundering. It now forms the base for coordinated response to threats faced by financial systems